Ferrante v. Sciaretta

CourtSuperior Court of New Jersey
Citation839 A.2d 993,365 N.J. Super. 601
PartiesMary FERRANTE, Plaintiff, v. Thomas J. SCIARETTA, in his individual and official capacities, the Borough of Bernardsville, a municipal corporation, and the Bernardsville Police Department, Defendants.
Decision Date14 August 2003

Lisa Manshel, Millburn, for plaintiff (Francis & Manshel). Dennis A. Cipriano, West Orange, for defendant Thomas J. Sciaretta.

Timothy Beck for defendants The Borough of Bernardsville and The Bernardsville Police Department (Bateman, Coley, Yospin, Kunzman, Davis & Lehrer).


This is plaintiff's post-judgment motion seeking a ruling to reflect the negative tax consequences of a lump sum award of economic damages. The application for this relief presents a question of first impression in New Jersey. Whether adverse tax consequences to a successful plaintiff in a discrimination case constitute "such damages" under N.J.S.A. 10:5-3 has not been decided by courts of New Jersey.

After a six week trial the jury returned a verdict in favor of plaintiff, Mary Ferrante, affirming that she was the victim of sexual harassment by Thomas Sciaretta, the former Police Chief of the Borough of Bernardsville, while she was an employee of that municipality's police department. The jury determined that the Borough of Bernardsville failed to take reasonable steps to prevent the sexual harassment. The jury also found the actions of Chief Sciaretta and the Borough of Bernardsville created a sexually hostile work environment and resulted in a constructive discharge of the plaintiff. It was also determined that the plaintiff was deprived of her rights to exercise free speech by the defendants.

The plaintiff recovered economic damages in the amount of $340,659, which included an award of back pay and front pay. She also received $26,250 in damages for emotional distress and suffering. Pre-judgment interest in the amount of $72,298.16 and $895,025.77 for counsel fees and disbursements were awarded.

To decide this issue, it is necessary to first examine the statutory framework of New Jersey's Laws Against Discrimination. N.J.S.A. 10:5-13 states in pertinent part:

... All remedies available in common tort actions shall be available to a prevailing plaintiff. These remedies are in addition to any provided by this Act or any other statute.

And also N.J.S.A. 10:5-3 states:

The Legislature finds and declares the practice of discrimination against any of its inhabitants because of ... sex ... are matters of concern to the Government of the state and that such discrimination threatens not only the rights and proper privileges of the inhabitants of the state but menaces the institution and foundations of a free democratic state...

The Legislature further declares its opposition to such practice of discrimination when directed against any person by reason of ... sex ... in order that economic prosperity and general welfare of the inhabitants of the state may be protected and insured.

The Legislature further finds that because of discrimination people suffer personal hardships and the state suffers grievous harm. Personal hardships include economic loss, time loss, physical and emotional stress...

Such harms have under the common law given rise to legal remedies, including compensatory and punitive damages. The Legislature intends that such damages be available to all persons protected by this act and this act shall be liberally construed in combination with other protections available under the laws. (Emphasis added.)

The Supreme Court in Fuchilla v. Layman, 109 N.J. 319, 324, 537 A.2d 652 (1988) stated ... the clear public policy of this state is to abolish discrimination in the work place. Indeed, the over arching goal of the law is nothing less than the eradication `of the cancer of discrimination.' Jackson v. Concord, 54 N.J. 113, 124, 253 A.2d 793 (1969).... The public interest in making a discrimination free work place infuses the inquiry. David v. Vesta Co., 45 N.J. 301, 327, 212 A.2d 345 (1965).

The nature of compensatory damages in discrimination cases ... include money damages awarded to a plaintiff `by way of compensation to make up for some loss that was not, originally, a money loss but one that ordinarily would be measured in money.' Dan B. Dobbs, Remedies, "Principles of Damages," (Section 3 at 135, 3rd Ed.1973). In an employment discrimination case such damages include back pay provided `to make the discriminatee whole by reimbursement of economic loss suffered' and front pay to compensate the employee for future lost wages attributable to the employer's misconduct. Baker v. National State Bank, 353 N.J.Super. 145, 158, 801 A.2d 1158 (App.Div.2002).

The statutory goal is to end discrimination; the victims want a discrimination-free work environment, not lawsuits. But when unlawful discrimination does occur, the secondary fallback purpose is to compensate the victims for their injuries. In other words "to make the victims of unlawful discrimination whole by restoring them, so far as possible ... to a position where they would have been were it not for the unlawful discrimination." (Emphasis added). Ford Motor Co. v. E.E.O.C., 458 U.S. 219, 230, 102 S.Ct. 3057, 3065, 73 L.Ed.2d 721 (1982).

The term "such damages" in N.J.S.A. 10:5-13 refers to compensatory damages in the preceding sentence. Black's Law Dictionary defines actual damages as "the amount awarded to a complainant in compensation for his actual and real loss ... synonymous with compensatory damages..." Compensatory damages are defined in part as "... such as will simply make good or replace the loss caused by the wrong or injury.... The rationale behind compensatory damages is to restore the injured party to the position he or she was in prior to the injury." Black's Law Dictionary, pp. 390 (6th Ed.1990).

The thrust of compensatory damages, as well as the underlying philosophy of the New Jersey anti-discrimination laws, make it clear that the statute should not only be liberally construed but broadly applied. In O'Neill v. Sears, Roebuck & Company, 108 F.Supp.2d 443 (E.D.Pa.2000), the court noted that front pay money has already been reduced to present value on the assumption that the plaintiff can invest the money and receive a return equivalent to the lost income. The court concluded that if the plaintiff must pay a higher tax on the present value of his earnings, then this leaves less for investment. Thus "the plaintiff will not, in fact, realize an investment gain large enough to equal the future wages [she] is not getting as a result of defendant's discriminatory conduct." The court referred to a television advertisement which stated "It's not how much money you make, it's how much money you keep," and expressed that it was the statutory goal to allow the plaintiff to keep the same amount of money as if he had not been unlawfully terminated, and decided that this goal requires reimbursement for the reduced amount of front pay money that the plaintiff has to invest as a result of higher taxes, as well reimbursement for higher taxes he must pay on his back wages caused by getting his money in a lump sum. O'Neill, supra 447.

The Washington Court of Appeals also considered this issue in Blaney v. Int'l Assoc'n. of Machinists and Aerospace Workers, 114 Wash.App. 80, 55 P.3d 1208 (2002). To avoid the adverse tax consequences of a lump sum award the court analyzed the broad scope of that state's statutory term, "actual damages" as well as the state's legislative policy to "deter and eradicate discrimination" and to make the matter a public policy of the "highest priority." The policy of construing the anti discrimination statute liberally to effect its purpose, and the grant of this type of relief in other federal cases, construing similar discrimination laws, O'Neill, supra and Sears v. Atchison, Topeka & Santa Fe Ry., 749 F.2d 1451 (10th Cir.1984), all support the conclusion that adverse federal income tax consequences triggered by the payment of a judgment for a violation of the (statute) are within the scope of the term "actual damages." Blaney, supra, 55 P. 3d at 1216-17. The court also realized the practical aspect of the tax impact on such an award would be a substantial reduction of damages award. The federal income tax would undercut the award which has been identified as "a public policy of the highest priority." Blaney, supra, 55 P.3d at 1216-17. The court concluded that plaintiff would share her award with the Internal Revenue Service and not receive its full benefit, therefore, would not be made whole which is the philosophy of the statute.

The logic of O'Neill and Blaney applies equally to New Jersey Laws Against Discrimination. As pointed out, the legislature mandated in order to effectuate the policies underlying LAD, the damage provision of that statute "shall be liberally construed". N.J.S.A. 10:5-3. Therefore, under the "make whole" policies of the statute, defendants will be required to compensate plaintiff for the negative tax consequences of receiving the lump sum award.

Defendants oppose plaintiff's request for relief on procedural and evidentiary grounds. Defendants contend that there is no support for this post-trial award under our rules and that the reports on which plaintiff bases her tax loss are net opinions.


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4 cases
  • Chuong Van Pham v. City of Seattle
    • United States
    • Washington Supreme Court
    • 1 février 2007
    ...F.2d 1451, 1456-57 (10th Cir.1984); EEOC v. Joe's Stone Crab, Inc., 15 F.Supp.2d 1364, 1380 (S.D.Fla.1998); Ferrante v. Sciaretta, 365 N.J.Super. 601, 839 A.2d 993, 996 (2003). ¶ 9 In Blaney, we concluded that the WLAD allows an offset for "additional federal income tax consequences" incurr......
  • Mallon v. Hudson Sav. Bank
    • United States
    • New Jersey Superior Court — Appellate Division
    • 23 juillet 2019
    ...tax consequences of a lump sum award of economic damages, and that case found such damages permissible. See Ferrante v. Sciaretta, 365 N.J. Super. 601 (Law. Div. 2003). Likewise, we hold a trial court may issue an award to successful plaintiffs under the LAD, to offset the negative tax cons......
  • Montone v. City of Jersey City
    • United States
    • U.S. District Court — District of New Jersey
    • 23 juillet 2018
    ...to compensate a plaintiff for the negative consequences of receiving a lump sum award of economic damages."); Ferrante v. Sciaretta, 365 N.J. Super. 601, 607 (N.J. Law. Div. 2003) ([U]nder the 'make whole' policies of the statute, defendants will be required to compensate plaintiff for the ......
  • Andujar v. Gen. Nutrition Corp.
    • United States
    • U.S. District Court — District of New Jersey
    • 20 août 2018
    ...calculation that this amount through October 2017 is $1,207.64.16 8. Negative Tax Consequences17Page 24 In Ferrante v. Sciaretta, 365 N.J. Super. 601, 603 (Law Div. 2003), the court held that a plaintiff is entitled to be compensated for the negative tax consequences of receiving a lump sum......

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