Can the New Jersey Law Against Discrimination Apply Outside the State?

The Appellate Division Recently Held That the New Jersey Law Against Discrimination (NJLAD) Can Extend Outside the State’s Borders

In Calabotta v. Phibro Animal Health Corp., the Appellate Division held that the New Jersey Law Against Discrimination (NJLAD) can extend outside the state’s borders. According to the appeals court, the NJLAD “can extend in appropriate circumstances to plaintiffs who reside or work outside of the state.”

Facts of Calabotta v. Phibro Animal Health Corp.

Plaintiff David Calabotta (Calabotta or plaintiff), an Illinois resident, filed suit against his New Jersey-based former employer. He alleges that Phibro Animal Health Corp. (Philbro) wrongfully denied him a promotion to a position in New Jersey and thereafter wrongfully terminated him from his job with its subsidiary in Illinois. Calabotta specifically claims the company engaged in “associational” discrimination against him, in violation of the NJLAD, based on the fact that his wife was then terminally ill with cancer.

In defense of the suit, Phibro maintains that Calabotta was terminated based on his inappropriate behavior at a trade show. It also argues that because Calabotta was never a New Jersey employee, he is prohibited from bringing a claim under the NJLAD.

The trial court concluded that Illinois law, rather than the NJLAD, must apply to plaintiff’s claims of discrimination because he lived in Illinois and worked for defendants’ subsidiary in Illinois. Given that Illinois law does not recognize a cause of action for associational discrimination, the court granted defendants’ motion to dismiss plaintiff’s claims with prejudice.

Appellate Division’s Decision in Calabotta v. Phibro Animal Health Corp.

The Appellate Division reversed. “[W]e conclude that the NJLAD, notwithstanding the solitary reference to ‘inhabitants’ in its preamble, can extend in appropriate circumstances to plaintiffs who reside or work outside of this state,” Judge Jack Sabatino wrote. “However, whether the NJLAD applies to a particular nonresident’s claims turns upon a weighing of the multiple choice-of-law factors set forth in the Restatement (Second) of Conflicts of Laws (Second Restatement), as adopted and construed by the New Jersey Supreme Court.”

As described by the Appellate Division, given the conflict between New Jersey and Illinois law regarding associational discrimination, it was required to answer two key questions under the Second Restatement:

First, did our Legislature intend the NJLAD to be broad enough to extend to certain nonresidents such as plaintiff who seek employment in New Jersey? Second, if so, has the Legislature issued through the NJLAD a choice-of-law “directive” that compels our courts to apply New Jersey law to such plaintiffs and their employers, rather than conflicting out-of-state laws?

With regard to the first question, the Appellate Division held that the New Jersey Legislature has expressed an intention to allow certain nonresident plaintiffs to receive the benefits and protections of the NJLAD. “Such an intention about the [Law Against Discrimination’s] breadth may be gleaned from both the words of the statute and the expansive policies that underpin it,” Judge Sabatino explained.

The Appellate Division further concluded that despite the inclusion of the term “inhabitants” in the preamble of the NJLAD, “the Legislature did not intend to confine the scope of the statute’s protections solely to plaintiffs and claimants who reside in this State.” In support, it cited “the [Law Against Discrimination’s] text and extensive legislative history,” which showed “no expression of legislative intent to limit the statute’s protections . . . to those employees who perform all of their employment functions in New Jersey.”

With regard to the second question, the Appellate Division held that “just because a New Jersey statute could embrace certain claims by out-of-state parties does not necessarily mean that those New Jersey laws inexorably must override contrary laws from other jurisdictions.” It also rejected the plaintiff’s argument that the Legislature mandated that it bypass the multi-factor analysis set forth in the Second Restatement. “We do not construe the NJLAD to bulldoze over the conflicting laws of other states that also have a nexus to the case,” Judge Sabatino wrote.

The Appellate Division went on to apply the Second Restatement’s balancing factors to complete the choice-of-law analysis. With regard to Calabotta’s failure-to-promote claim, the Appellate Division held that “New Jersey law, and specifically the NJLAD’s ban against associational discrimination, applies to defendants’ alleged failure to give plaintiff fair consideration for a promotion to a position in New Jersey.”

In reaching its conclusion, the Appellate Division distinguished its prior decision in Buccilli v. Timby, Brown & Timby, which the trial court had relied upon in dismissing the NJLAD claim. In Buccilli, the court found that Pennsylvania law, rather than the NJLAD, governed a New Jersey resident’s claims of discrimination by her Pennsylvania employer for whom she had worked in Pennsylvania. According to the court, its decision in Buccilli “should not be misread to impose a bright-line choice-of-law principle that all employment discrimination claims must be governed by the law of the state where a plaintiff exclusively or principally worked.” The court further emphasized that “while plaintiff’s place of work is surely an important consideration, it is not always dispositive.” Rather, other aspects of the case may at times override it. With regard to Calabotta’s failure-to-promote claim, the court highlighted that the new position he sought was going to be located in New Jersey, where the defendant company Phibro is based.

With respect to Calabotta’s wrongful discharge claim, the Appellate Division vacated the trial court’s dismissal and remanded the choice-of-law issue pertaining to that claim to the trial court for further analysis. “We do so to enable the further development of critical facts bearing on the Second Restatement factors,” Judge Sabatino explained. “Among other things, the record needs to be developed more fully and definitively concerning such things as: the location(s) of the person(s) within the company who took part in the decision to terminate plaintiff; the sole or dominant place, if any, that the decision was made; and the location(s) of plaintiff’s conduct that precipitated his discharge.”

Key Takeaways for New Jersey Employers

For New Jersey-based employers, the Appellate Division’s decision makes it clear that workers who reside and work outside of New Jersey may still seek protection under the NJLAD. To limit your potential liability, we encourage employers to work with an experienced New Jersey employment attorney.