Collateral Source Statute Does Not Apply to Awards Under the New Jersey Law Against Discrimination

Acevedo v. Flightsafety International, Inc., 449 N.J. Super. 185 (App. Div. 2017).  In this opinion by Judge Reisner, the Appellate Division held that it was error for the Law Division to offset a back pay award under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-12 to -49 (“LAD”) with a portion of the unemployment benefits that plaintiff received after having been fired for a disability.  The panel ruled that the collateral source statute, N.J.S.A. 2A:15-97, does not apply to LAD cases.

Defendant at first relied on the express terms of the collateral source statute, which replaced the common law collateral source rule.  But Judge Reisner observed, based on the statute’s “language and legislative history that this statute was intended to reduce automobile insurance premiums by abrogating the common-law collateral source rule in personal injury cases.”  Nothing in the collateral source statute or its history “supports its application to LAD cases.”

Recognizing that, defendant fell back to an argument that public policy compelled a deduction, in order to avoid double recovery.  Judge Reisner disagreed.  The LAD is remedial legislation, designed to protect employees and eradicate discrimination in employment.  “Shifting the benefit of unemployment compensation from the wronged employee to the discriminating employer does not serve the LAD’s deterrent purpose.”

Judge Reisner cited a number of considerations that supported the panel’s result.  First, the Legislature could have included a collateral source provision in the LAD, but chose not to do so, either when the LAD was first adopted or at any of the times when the statute was amended.  Second, the Division on Civil Rights, which also enforces the LAD, does not deduct unemployment benefits from back pay awards.

Third, the relevant Model Civil Jury Charge “specifically provides that unemployment benefits are not deducted from back pay awards.”  That Model Charge, which is not itself binding, cited two cases in support of its result, Sporn v. Celebrity, Inc., 129 N.J. Super. 449 (Law Div. 1974), and Craig v. Y. & Y. Snacks, 721 F.2d 77 (3d Cir. 1983).  The fact that the Model Charge was readopted in 2014 “signals a consensus that those cases are still regarded as persuasive authority in this area of law.”

Finally, Judge Reisner cited other federal cases (including one from the Supreme Court of the United States) that had ruled, under federal statutory law, that unemployment benefits are not to be deducted from back pay awards.  Defendant could not cite any New Jersey precedent indicating that the Supreme Court of New Jersey would permit the deduction of unemployment benefits from an LAD award.  Accordingly, the panel modified the back pay award to add back the amount of unemployment compensation that the Law Division had mistakenly deducted.


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