Full title: WILLIAM NEWNAM, Plaintiff-Appellant, v. CHUBB & SON, a division of FEDERAL INSURANCE COMPANY, Defendant-Respondent.
Court: SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
Date published: Feb 5, 2015
Facts
The plaintiff, born in 1933, began working as a field auditor for the defendant in 1978. He conducted audits of insurance policies that were about to expire, and the defendant employed approximately twenty field auditors and contracted with fee companies. In the last years, the plaintiff primarily worked in the Western Pennsylvania area, earning $78,000 per year as an employee. In 1999, the plaintiff retired as an employee and began collecting a monthly pension of $1,419.71. The defendant retained the plaintiff as an independent contractor, continuing to perform premium audits in the Western Pennsylvania area.
In 2003, the plaintiff created a fee company called Newnam Valuation Services (NVS) and entered into a written “Premium Audit Services Agreement” under which NVS would provide audit services to the defendant. Under the agreement, the plaintiff charged the defendant $65 per hour for conducting the audits, plus additional amounts to cover travel expenses. In 2006, the plaintiff earned approximately $161,950 through his fee company, compared to the $78,000 he previously earned as an employee.
In 2007, the defendant began investigating ways to eliminate or reduce the $900,000 cost overrun associated with its use of fee companies rather than employees to conduct audits. They developed an overall strategy of increasing the workload of the field auditors, which would reduce the number of audits that needed to be farmed out to the independent fee companies. By July 2009, the defendant had saved approximately $95,000 on the amount it would have had to pay fee companies.
The management team identified Field Auditor Reed as a good fit for the Western Pennsylvania area, and by the end of 2009, these moves had reduced the defendant’s fee company expenses by another $200,000. However, Reed raised concerns about the plaintiff’s work on the prior year’s audit, and O’Briant told Reed that he could not call him a fiber.
In 2010, a former employee of NVS, a company that provided audit services, was terminated due to a disagreement between the former employee and O’Briant. The former employee, who was seventy-six years old at the time, claimed that O’Briant had made comments about the plaintiff’s age and the fact that he would not be around forever. O’Briant denied these comments and later stopped using other fee companies in favor of using less expensive field auditors. The plaintiff later called O’Briant to discuss his termination, and she told him that the decision was final. The plaintiff sent emails to other employees employed by the defendant, but none expressed concern that the contract was terminated because of age discrimination. On February 17, 2012, the plaintiff filed an amended two-count complaint against the defendant, alleging that the defendant terminated his contract and stopped doing business with him on account of his age in violation of N.J.S.A. 10:5-12(a). The defendant filed an answer and, following the completion of discovery, filed a motion for summary judgment.
Issue
Decision
Our review of a ruling on summary judgment is de novo, applying the same legal standard as the trial court. Nicholas v. Mynster, 213 N.J. 463, 477-78 (2013). Thus, we consider, as the trial judge did, “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995) (internal quotation marks omitted). Summary judgment must be granted “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.” R. 4:46-2(c). If there is no genuine issue of material fact, we must then “decide whether the trial court correctly interpreted the law.” Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007), certif. denied, 195 N.J. 419 (2008). We review issues of law de novo and accord no deference to the trial judge’s conclusions on issues of law. Nicholas, supra, 213 N.J. at 478.
The LAD prohibits discriminatory employment practices. Viscik v. Fowler Equip. Co., 173 N.J. 1, 13 (2002). To prove employment discrimination under the LAD, New Jersey courts have adopted the burden-shifting analysis established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S. Ct. 1817, 1824, 36 L. Ed. 2d 668, 677 (1973); Viscik, supra, 173 N.J. at 13-14. Under that analysis, the plaintiff must first present sufficient evidence to establish a prima facie case of unlawful discrimination. Dixon v. Rutgers, 110 N.J. 432, 442 (1988) (citing McDonnell Douglas Corp., supra, 411 U.S. at 807, 93 S. Ct. at 1826, 36 L. Ed. 2d at 680; Peper v. Princeton Univ. Bd. of Trs., 77 N.J. 55, 82-83 (1978)). The defendant then has the burden to present evidence establishing a legitimate, non-discriminatory reason for its employment action. Dixon, supra, 110 N.J. at 442 (citing Peper, supra, 77 N.J. at 83). If the defendant presents such evidence, the burden shifts back to the plaintiff to prove that the defendant’s proffered reasons are merely a pretext for unlawful discrimination. Ibid. (citing Peper, supra, 77 N.J. at 83).
Like the motion judge, we view the evidence in the light most favorable to the non-moving party and will assume for purposes of this opinion that the plaintiff met his burden of presenting evidence under the first prong of this test. Brill, supra, 142 N.J. at 540. Moving to the second prong, it is clear that the defendant presented overwhelming evidence that all of its actions regarding the termination of the plaintiff’s contract were based on legitimate business considerations. Beginning in 2007, the defendant recognized that it was overspending its budget for fee companies to the tune of approximately $900,000 per year. In response to this discovery, it instituted a company-wide effort to address this problem and reduce these costs.
For reasons that are fully documented in the motion record, the defendant began giving its employees more audits to perform while, at the same time, reducing its reliance on fee companies like the plaintiff’s NVS. The plaintiff was fully aware of this strategy as it progressed. The program generated considerable cost savings for the defendant over the next two years.
By 2010, a field auditor employed by the defendant was assigned to the geographic area previously serviced by the plaintiff through his fee company. This auditor identified problems with one of the plaintiff’s audits and the defendant discovered that the plaintiff charged the company for work on another matter that he had not performed. When these concerns were brought to plaintiff’s attention, he responded in an unprofessional manner.
At that point, the defendant made a business decision to no longer use the plaintiff’s fee company and terminated his contract. The plaintiff’s fee company was not the only company that was eliminated as part of the defendant’s overall strategy. At one time, the defendant used seventeen fee companies to handle premium audits. By the time of the judge’s decision dismissing the complaint, that number had been reduced to seven.
Turning to the third prong, we agree with the motion judge’s conclusion that the plaintiff failed to demonstrate that the defendant’s articulated, and fully documented, reasons for terminating the contract were a pretext for discrimination. To show pretext under the third prong of the McDonnell Douglas test, and thereby successfully rebut the employer’s purported legitimate reason for its adverse action, a plaintiff may: “‘(i) discredit[] the proffered reasons [of the defendant], either circumstantially or directly, or (ii) adduce[e] evidence, whether circumstantial or direct, that discrimination was more likely than not a motivating or determinative cause of the adverse employment action.'” DeWees v. RCN Corp., 380 N.J. Super. 511, 528 (App. Div. 2005) (quoting Fuentes v. Perskie, 32 F. 3d 759, 764 (3d Cir. 1994)). The “plaintiff must demonstrate such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer’s proffered legitimate reasons for its action that a reasonable factfinder could rationally find them ‘unworthy of credence,’ . . . and hence infer ‘that the employer did not act for [the asserted] non-discriminatory reasons.'” Ibid. (citations omitted).
In an attempt to prove the defendant’s reasons for terminating the contract were pretextual, the plaintiff asserts that the defendant offered the trial court additional reasons for terminating the plaintiff, beyond the reason it gave to the EEOC in O’Briant’s certification. Thus, the plaintiff asserts that the defendant’s “inconsistent” positions created a credibility issue that had to be decided by a jury.
As noted above, however, the defendant fully documented that the primary reason for terminating the plaintiff’s contract was its desire to reduce the amount of money it was spending on fee companies. As that strategy progressed and a field auditor employed by the defendant began to take over some of the plaintiff’s accounts, problems with some of the plaintiff’s billings were discovered. These problems, and the plaintiff’s unprofessional response to inquiries concerning them, became additional, but in no way inconsistent, reasons for terminating the contract at that time. At all times, the plaintiff was aware of the defendant’s concerns regarding the higher costs generated by fee companies, as well as the questions raised concerning the plaintiff’s work on several audits. The plaintiff’s contention on this point therefore lacks merit.
The plaintiff also asserts that O’Briant’s comments to him about his age demonstrated that any business reason given by the defendant for the termination of the contract had to be pretextual. Again, we disagree. As discussed above, the defendant’s cost-cutting strategy did not originate with O’Briant and was the product of a three-year-long, company-wide effort. In his post-termination communications with the defendant’s employees, the plaintiff acknowledged the legitimacy of the defendant’s overall plan. Ten other fee companies were eliminated and the defendant saved hundreds of thousands of dollars as a result of the plan. Thus, we cannot conclude that O’Briant’s comments, if made to the plaintiff, were sufficient to establish that the defendant’s business decision, made and implemented throughout three years, was simply a pretext for refusing to do business with the plaintiff because of his age.
Finally, the plaintiff asserts that the defendant’s cost reduction plan had to be a pretext because “no one ever spoke with him about reducing his fees or expenses before his termination” or asked him if he wanted to “become [e] an employee again instead of a contractor.” This argument also lacks merit. Defendant’s business plan was to reduce and eventually eliminate the use of fee companies, rather than to keep them if they could reduce their rates. This plan was implemented across the board and was not based upon the age of a fee company’s owner or employees. There is also no evidence in the record that the plaintiff wanted or asked to go back to being a regular employee, or that he could even do so after beginning to collect his pension in 1999.
In sum, we are convinced from our review of the record that the plaintiff failed to present sufficient evidence to show that a genuine issue existed as to whether the defendant’s reasons for terminating his contract were merely a pretext for unlawful discrimination. Therefore, the motion judge properly dismissed the plaintiff’s age discrimination claim.
Affirmed. I hereby certify that the preceding is a true copy of the original on file in my office.