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Delli Santi v. CNA Ins. Companies

June 20, 1996

EVELYN DELLI SANTI APPELLANT IN NO. 94-5331

v.

CNA INSURANCE COMPANIES; CONTINENTAL CASUALTY COMPANY; RICHARD FARAH EVELYN DELLI SANTI

v.

CNA INSURANCE COMPANIES; CONTINENTAL CASUALTY COMPANY; RICHARD FARAH APPELLANTS IN NO. 94-5347



Appeal from the United States District Court for the District of New Jersey

(D.C. Civ. No. 88-cv-05137)

Before: MANSMANN *fn* and ALITO, Circuit Judges, and RESTANI, Judge, Court of International Trade. *fn**

MANSMANN, Circuit Judge.

Argued March 7, 1996

Filed June 20, 1996)

OPINION OF THE COURT

In this discrimination case tried pursuant to the New Jersey Law Against Discrimination, the jury found that Evelyn Delli Santi proved by a preponderance of the evidence that CNA Insurance Company discharged her in retaliation for her complaints of age and sex discrimination. The jury specifically rejected CNA's assertion that it discharged Delli Santi because she allegedly inflated her gasoline expense records. Nonetheless, the district court granted CNA's motion for judgment as a matter of law and conditionally granted its motion for a new trial, holding that CNA proved as an affirmative defense that, despite retaliatory intent, it would have discharged Delli Santi in any event.

We find that, under these specific circumstances of the jury's rejection of the non-discriminatory reason proffered by the defense, the court could not utilize this evidence against the plaintiff. Therefore, since there was legally sufficient evidence to support the jury's verdict, we will vacate the district court's judgment as a matter of law on the affirmative defense for CNA. We will also vacate the district court's conditional grant of a new trial because, based upon our review of the record, the verdict was not against the clear weight of the evidence.

We will, however, affirm the district court's order granting CNA a new trial unless Delli Santi agrees to accept a remittitur of the jury's excessive pain and suffering award. Therefore, we will return this case to the district court for entry of judgment on the jury verdict, including the jury's front pay award of $152,266 representing Delli Santi's future economic losses.

I. *fn1

In 1951, Evelyn Delli Santi began her employment as a typist clerk with The American Casualty Insurance Company, which eventually merged with CNA. By the mid-1960s, she was a first-party claims handler. CNA continued to promote Delli Santi and, ultimately, she became a claims representative. Although CNA's home office is located in Chicago, Illinois, Delli Santi reported to the Cedar Knolls, New Jersey branch office, part of CNA's eastern region.

Delli Santi first complained about discrimination during an employee communication session ("ECS") with Richard Farah, a New Jersey branch claims manager, in October 1986. According to Delli Santi, she told Farah that her supervisors in the past informed her that the company would not promote her above grade level 34 until she came in from her field position. *fn2 When Farah told her this was untrue and there were two men in field positions at grade level 36 (a higher level), Delli Santi stated: "[T]hat's pretty good. I said, that's discrimination, I says, sex and age. . . . And I told him, I didn't think the company really cared about promoting women because I had a problem once before, as you heard early on, when we merged, and I didn't think it was right." In April 1987, Delli Santi complained of discrimination to Dennis McCarthy, her immediate supervisor, at her annual performance review. Dissatisfied with CNA's failure to promote her along with male counterparts in the field, she said, "[T]here you go, there it is, discrimination. I said, this is not fair, and I'm not happy at all with this situation." According to Delli Santi, McCarthy told her that she should talk to Farah about her complaints.

The third discrimination complaint arose one week later in another ECS meeting with Farah. There Delli Santi voiced her disapproval about the refusal to promote her to grade level 36, stating "[A]s far as I'm concerned it's more discrimination, harassment, age and sex discrimination, and its not right, and I'm not happy with it at all." After making these complaints, Delli Santi's expense reports were called into question. *fn3 Delli Santi's gas mileage and the number of handwritten receipts for her May expense report were substantially the same as they were in three previous expense submissions that McCarthy and Farah had reviewed and approved for the last half of March and all of April 1987. When Delli Santi submitted her expense reports for May 1987, however, McCarthy took exception to the amount reported for gas purchases because "the numbers were a little bit off." *fn4 Delli Santi's May 1987 expense reports reflected fifteen gasoline purchases during a thirty-one day period in which she drove less than 800 miles. Only four of the gasoline purchases were documented by identifiable service station receipts. The remaining eleven purchases were documented by Delli Santi's own "in lieu of" vouchers, which had handwritten dollar amounts and dates, an acceptable alternative to service station receipts.

Subsequently, CNA conducted an internal investigation into Delli Santi's expense accounts. Based upon the results of this investigation, CNA concluded that Delli Santi had inflated her expense accounts. On September 16, 1987, CNA terminated Delli Santi after thirty-six years of employment ostensibly because she misrepresented her gas expenses for her company car. At the time Delli Santi was 59 years old.

In October 1988, Delli Santi filed a multi-count complaint in a New Jersey state court against CNA and Farah. Delli Santi's original complaint included claims pursuant to both the federal Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Section(s) 621-634 (1994) and the New Jersey Law Against Discrimination ("LAD"), N.J. Stat. Ann. Section(s) 10:5-12d (West Supp. 1994). CNA removed the case to the U.S. District Court for the District of New Jersey. Prior to trial, however, Delli Santi abandoned her ADEA claim. Consequently, after the district court disposed of all pre-trial motions, the sole issue for the jury to decide was whether the evidence supported Delli Santi's LAD retaliation claim. This claim was tried to a jury from January 20 to February 10, 1994. *fn5

At trial, Delli Santi argued that CNA singled her out for termination, not because she falsified her expense accounts, but because she had complained about discrimination. In support, Delli Santi relied, inter alia, upon the following stipulation, which was read to the jury:

According to the CNA fleet reports, from January 1985 through March 1988, 215 persons achieved a mileage of less than 10 miles per gallon in one of the 13 quarters reported. Of those persons, 31 had a reported mileage of less than 10 miles per gallon in more than one reporting quarter. App. at 1090.

In addition to the above stipulation, Delli Santi pointed to the following October 27, 1987 internal CNA memo, which was issued to all fleet services managers:

We have discovered situations such as vehicles consistently averaging less than 10 miles per gallon (our fleet averages 23 m.p.g.) . . . . In some instances, these conditions have existed for several quarters which is an indication that drivers are not being counseled. App. at 326.

Although the memo advised managers to "counsel" these drivers, there was no directive to investigate, discipline or terminate any of them.

The memo referring to widespread instances of arguably suspicious low mileage similar to Delli Santi's was also distributed to David Koester, senior vice president of administration, who testified at trial that no action whatsoever was taken against these drivers. Indeed, Koester and Kent Crassweller, an investigation manager, conceded that they were not aware of anyone -- except Delli Santi -- who was investigated, disciplined or terminated for reporting low gas mileage. Koester's testimony, however, is at odds with his statement that any fleet driver reporting under ten miles per gallon should have been investigated because "it's an indicator of some issue." At trial, CNA introduced the following evidence. *fn6 Larry Schroeder, the Chicago corporate security manager, reviewed Delli Santi's May expense report and decided to open an investigation. Schroeder stated that he opened the Delli Santi investigation because the handwritten vouchers, coupled with the low mileage, were "strange." Accordingly, in June 1987 Crassweller, an investigation manager, and Kathy Foster, a regional personnel manager, interviewed Delli Santi, asking her to explain the handwritten receipts. Delli Santi stated that she wrote them herself on receipt pads from her brother's business. When questioned about her gas mileage, Delli Santi stated that the car "gets what it gets" and explained that (1) she sometimes would allow her car to idle (running the air conditioner or heater depending on the season); (2) children might be stealing gas from her car; and (3) the car "ran rough." Following the interview, Crassweller reported this conversation to Schroeder and Robert Keith, corporate security manager.

Crassweller then returned to Chicago and supervised a review of several of Delli Santi's past expense reports, which revealed the following: if Delli Santi's handwritten generic receipts were totally discounted and her gasoline calculated solely on the basis of verifiable service station receipts, the gasoline mileage for her 1984 Dodge Aries K would have been eighteen miles per gallon for the first quarter of 1986; twenty-four miles per gallon for the third quarter of 1986; seventeen miles per gallon for the fourth quarter of 1986; and sixteen miles per gallon for the first quarter of 1987. These averages were consistent with the estimated mileage of twenty-three miles per gallon for her vehicle and the company's fleet-wide average of approximately twenty-three-and-a-half miles per gallon.

The investigation into Delli Santi's expense reports, over a period of more than three years, revealed an inverse relationship between the average number of handwritten receipts submitted per expense period and gasoline mileage. In 1984, Delli Santi averaged eleven to thirteen miles per gallon, with an average of two to three handwritten receipts per expense period; in 1985, she averaged about ten miles per gallon, with an average of three to four handwritten receipts; in 1986, she was getting about seven miles per gallon, with an average of four handwritten receipts per expense period; and, finally, in 1987, Delli Santi got only six miles per gallon, with an average of five handwritten receipts per expense period.

CNA's corporate security manager, Robert Keith, stated that he was "highly suspicious" and believed Delli Santi was stealing, but he was reluctant to terminate Delli Santi without first affording her the benefit of the doubt. Because Delli Santi had stated at the outset of the investigation that the car "ran rough," Keith decided to have her car test driven. Accordingly, Farah directed Leonard Polizzi, a manager in another CNA office, to test drive the car and keep a record of the gas mileage. Polizzi drove Delli Santi's car back and forth to his office, a round trip of eighty miles per day, and reported that the car had given him twenty-four to twenty-seven miles per gallon with no mechanical problems. Because Polizzi performed the test drive generally under highway conditions, the test drive may not have duplicated Delli Santi's exact driving conditions.

Keith testified nonetheless that the test drive results confirmed his belief that Delli Santi used inflated expense accounts to steal. He immediately reported this belief to his superior David Koester, senior vice president of administration, and Carolyn Murphy, senior vice president of field operations. ...


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