In a recent decision of importance to employers, the New Jersey Appellate Division expanded potential employer liability in co-worker sexual harassment cases under the state’s Law Against Discrimination, N.J.S.A. § 10:5-1, et seq. (the “LAD”). In Cerdeira v. Martindale- Hubbell, 402 N.J. Super. 486 (App. Div. 2008), the Court held that an employer may be liable for co-worker sexual harassment based upon its negligent failure to have in place effective harassment policies – even if the employer was unaware of the harassment. This decision broadens potential employer liability under the LAD and highlights the importance of promulgating and actively enforcing appropriate sexual harassment policies.

The Facts

In 1983, plaintiff Robin Cerdeira began her employment with defendant Martindale- Hubbell (“Martindale”) as a typist. Over the ensuing years, she received various promotions. In 2000, Martindale promoted her to the position of senior analyst, a nonmanagerial position in which she handled administrative responsibilities, such as processing mail and inputting information into the computer system.

During her employment, Martindale distributed memoranda to employees regarding sexual harassment although, according to Cerdeira, she never received one. She received a copy of the company’s Code of Conduct, however, which included a general anti-harassment provision. The provision stated, “‘[t]he Company will make every reasonable effort to provide an environment free from harassment of any kind toward any individual.’” The Code instructed each employee to direct any questions to “‘his or her immediate supervisor, local Human Resources Representative, or [the company’s] Legal Department.’” The Code did not include a separate sexual harassment policy or complaint procedure.

According to Cerdeira, in 2001, a coworker from a different department, Melvin Bowers, began subjecting her to “harassing conduct.” Bowers, a programming analyst, was not a supervisor or manager.

Bowers’ conduct, which persisted for two years, included sending Cerdeira sexually explicit pictures and Frederick’s of Hollywood and Victoria’s Secret catalogues. He also placed inappropriate telephone calls to her. During these calls, Bowers indicated that he was masturbating and thinking of her. On one occasion, he left thong underwear, a bra, perfume, and a camera at Cerdeira’s desk and told her that he wanted her to photograph herself for him.

Cerdeira never reported Bowers’ behavior to a supervisor at Martindale. She only confided in a fellow co-worker about it. The co-worker neither encouraged her to report the conduct nor asked why she had not done so.

In July 2003, Rico West, a mailroom supervisor, walked by Cerdeira’s work area and saw a sexually explicit picture that Bowers had sent her. West urged Cerdeira to report the incident. He said that if she did not report it, then he would do so because he feared losing his job for not reporting it.

Cerdeira then reported Bowers’ conduct to her direct supervisor, who promptly contacted Martindale’s Director of Human Resources. Fifteen minutes later, the Director of Human Resources met with Cerdeira. Martindale immediately suspended Bowers and fired him two days later.

The company permitted Cerdeira to “take as much time off as she needed.” She took “paid leave with full benefits for several months.” In November 2003, she returned to work and resumed her employment.

The Trial Court

On May 26, 2005, Cerdeira filed a lawsuit against Martindale, asserting claims for hostile work environment sexual harassment under the LAD. Following discovery, Martindale filed a motion for summary judgment, seeking to dismiss the Complaint in its entirety. Martindale argued that it could not be liable to Cerdeira under the LAD for her co-worker’s conduct, about which it had been unaware.

The trial court agreed. Although the court recognized that there may have been contested factual issues regarding whether Martindale had an effective sexual harassment policy, it concluded that these issues were irrelevant because Cerdeira’s claims involved alleged co-worker – not supervisor – harassment about which the company lacked actual knowledge. Cerdeira appealed.

The Appellate Division

On appeal, Cerdeira argued that the trial court’s decision to grant summary judgment had been erroneous “‘in light of [Martindale’s] negligence in failing to have an effective sexual harassment policy in place.’”

According to the Appellate Division, the New Jersey Supreme Court has recognized that, in supervisory sexual harassment cases, employers may be liable for hostile work environment claims under a negligence theory based upon their failure to have effective sexual harassment policies in place.

The Appellate Division observed, however, that the Supreme Court has not articulated a “standard of negligence governing such claims.” In the absence of a specific standard, the Appellate Division explained that such claims “must be analyzed under traditional negligence principles, which draw upon notions of fairness, common sense, and morality.” The Appellate Division also observed that the Supreme Court has not addressed whether an employer may be liable under a negligence theory for coworker harassment.

Specifically, according to the Court, “[t]here are no published New Jersey decisions that have addressed employer liability for co-worker harassment based upon the negligent failure to have in place effective and well-publicized sexual harassment policies.” Following federal caselaw, the Court held that the negligence theory applicable to supervisory harassment extends to co-worker harassment as well. The Court observed that limiting the theory only to supervisory harassment claims “could potentially discourage employers from adopting proactive sexual harassment policies that are well-publicized and directed to all employees.”

The Court explained that in deciding Martindale’s summary judgment motion, the trial court should have first considered whether the company’s policies “provided a reasonable avenue through which plaintiff could have voiced her complaints about Bowers.” If the policies did not provide such an avenue, the trial court should have addressed “whether the absence of such an effective policy was causally related to any harm plaintiff claims she suffered.” According to the Appellate Division, this latter issue relates to proximate cause and is typically a question for the jury.

Because the trial court did not consider these subjects, the Appellate Division reversed summary judgment and remanded the case. The Appellate Division noted that it had not determined “that the proofs before the court were sufficient to survive summary judgment on a negligencebased theory,” and left this issue for the trial court.

Conclusion

The Cerdeira v. Martindale- Hubbell decision expands potential employer liability for hostile work environment sexual harassment claims. As a result of the decision, an employee may maintain a negligence claim against an employer for coworker harassment even if the employer was not aware of the misconduct. Particularly given this decision, it is imperative that employers promulgate and uniformly apply effective anti-harassment policies and procedures.