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August 2003, No. 3

August 2003, Vol. I, No. 3

Does a Plaintiff’s Failure to Use Company Procedures Against Sexual Harassment a Valid Defense to Sexual Harassment? Not always. Prior to answering that question in Entrot v. BASF Corp., 359 N.J. Super. 162 (App. Div. 2003), the Appellate Division first explained that an employer is vicariously liable for a supervisor’s sexual harassment of another employee only when the supervisor had the power to control the work environment. If so, the employee can recover any and all damages under LAD. The panel then stated that if a supervisor’s sexual harassment leads to a “tangible employment action,” the defense of failing to following the sexual harassment procedures/guidelines is not available. Tangible employment action has been defined as hiring, firing, failing to promote, reassignment, or change in benefits. See, e.g., Burlington Indus., Inc. v. Ellerth, 524 U.S. 742 (1998). In Entrot, the Appellate Division ruled that constructive discharge qualifies as a tangible employment action. Although this ruling expands the rights of harassed employees, it eliminates the effectiveness of widely spread policies against sexual harassment. Expect the Supreme Court to determine how these two competing interests should be balanced. For those of you interested, the plaintiff in Entrot alleged that she quit after being subject to sexual advances and relations and psychological pressures from a supervisor. The supervisor claimed that the relationship was consensual.

Notice is Not Required in All Premises Liability Cases. If the nature of a defendant’s business creates a hazard, a plaintiff is entitled to the mode of operation charge. In other words, the plaintiff does not have to prove notice, and he or she receives an inference of negligence that shifts the burden of production to the defendant to show that it took all precautions that our old friend the reasonably prudent person would have taken. See Nisivoccia v. Glass Gardens, Inc., 175 N.J. 559 (2003). In Nisivoccia, the defendant stored grapes in open, slit bags, and the plaintiff fell near the checkout area after stepping on a grape. The trial court and Appellate Division failed to provide the plaintiff with the mode of operation charge because the plaintiff fell outside of the produce area. Huh? The Supreme Court correctly reversed and explained that loose items are reasonably likely to fall to the ground thereby creating a dangerous condition. Finally, kudos to the Supreme Court for its short opinion and statement of the law – reminiscent of old opinions.

Can an Attorney Include a Mandatory Arbitration Clause in a Retainer Agreement? Yes, but he better provide a clear statement that the client understands that she loses the right to a jury trial, has a limited right to appeal, and has a greater cost exposure. See Kamaratos v. Palias, 360 N.J. Super. 76 (App. Div. 2003). In Kamaratos, the attorney prepared a retainer agreement that mandated that any fee disputes would be privately arbitrated. Some of you are probably asking how did the attorney circumvent R. 1:20A, which provides that attorneys must advise clients that they have the right to pursue fee arbitration with a local committee. Well, the attorney conceded before the Appellate Division that R. 1:20A took precedent over the retainer agreement. In any event, the amount in controversy ($120,000) exceeded the jurisdictional limits of a local fee arbitration committee. So, you better check your standard retainer agreement if it contains a clause that all fee disputes must go to arbitration.

Ethics Tip of the Month. If a firm has a mentally impaired attorney on staff, it might face an ethical violation. Rule 1.16(a)(2) of the ABA Model Rules of Professional Conduct provides that a lawyer must stop representing clients when “the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client.” The impaired lawyer has an obligation to withdraw, and the firm must take measures to ensure that the representation does not suffer, e.g., removing the attorney or adding supervision. See Formal Op. 03-429 by ABA Standing Comm. on Ethics and Prof. Resp. The firm should also report the impairment. Although the Model Rule appears harsh in its application, its goal of protecting clients is worthy. In the event of a colleague’s declining mental or physical health, be careful because you will need to take action to avoid a potential ethical problem.

Contributions. If anyone has an interesting case, rule interpretation, ethical opinion, or civil-related story, please contact me at 201-918-3560, (f) (201) 845-5973, or e-mail [email protected] so that we can continue to provide the Bar with this monthly update.