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Sept 2003, No.4

September 2003, Vol. I, No. 4

Can One Recover for Humiliation, Embarrassment, and Indignity in a Sexual Harassment Case? Yes, even without expert testimony. The LAD provides that a person who suffers from discrimination can recover for, inter alia, “emotional stress.” See N.J.S.A. 10:5-3. In reversing the trial court, the Appellate Division explained that humiliation, embarrassment, and indignity are compensable under the LAD “without corroborative proof, permanency of response, or other physical or psychological symptoms rendering the emotional distress severe or substantial.” This last point distinguishes claims for emotional distress under LAD from those under regular tort principles. In remanding, the panel commented that the factors in determining the amount of the damages include the duration, public nature, and content of the conduct as well as a plaintiff’s suffering. Good decision, and one must wonder how the trial court failed to consider the statutory language.

Is an Employee a Named Insured under an Employer’s Insurance Policy for UM Purposes? According to a recent Appellate Division, no. See Botti v. CNA Ins. Co., 361 N.J. Super. 217 (App. Div. 2003). Although two other panels have ruled that an employee is a named insured under similar circumstances, the Botti panel concluded that the employer’s UM’s step-down clause applied to an employee who was in an accident because (1) it construed “named insured” to mean only the corporate entities that were listed in the declaration page, and (2) the employee had a personal policy that triggered the step-down clause, i.e., the employer’s insurer was permitted to limit the UM coverage to the amount in the employee’s personal policy. In reaching its decision, the panel stated that the fact that corporations cannot sustain personal injury does not dictate a contrary outcome. What?! If companies cannot sustain personal injuries, then UM coverage for employers must be to protect its employees. The Appellate Division also ignored that the employee paid $15 per week towards the premium. This decision is “bad law” because it limits coverage to those unfortunate employees who have their own cars. That’s right – if an employee does not have her own car, the Appellate Division would permit that employee to recover the full amount of UM coverage under the employer’s policy. This decision creates two classes of employees, which is unfair, unjust, and fails to fulfill the reasonable expectations of employers and the employees who drive employers’ cars. Expect to see this case in the Supreme Court.

Are Mandatory Arbitration Clauses in Retainer Agreements Allowed? Yes, but an attorney 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. 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.