NJ Supreme Court Punitive Damages against a Public Entity

In Pritchett v. State (A-5-20/084451) (Decided August 12, 2021), the Supreme Court of New Jersey held that trial courts reviewing a punitive damages award issued by a jury against a public entity defendant must apply heightened scrutiny.

Facts of Pritchett v. State

Plaintiff Shelly Pritchett worked for the Juvenile Justice Center (JJC), which runs the state’s juvenile correctional facilities. She was diagnosed with multiple sclerosis. When her second request for unpaid leave was denied, her supervisor refused to explain the denial or put the denial in writing. On November 1, 2011, Pritchett learned that she would be subject to disciplinary proceedings — which would result in her termination without a pension — if she did not resign by the end of the week. Pritchett applied for retirement disability benefits on November 4. Weeks later, her union representative informed the JJC that Pritchett believed she was forced into retirement against her will. The JJC’s Equal Opportunity Office expressed its opinion that the JJC “failed to engage in the interactive process,” which “resulted in a violation of the State Anti-Discrimination Policy,” but opined that Pritchett’s “request for reinstatement [was] mooted by [her] approval for disability retirement.”

Pritchett filed a complaint alleging the State violated the New Jersey Law Against Discrimination (LAD). The jury awarded Pritchett compensatory damages in excess of $1.8 million and punitive damages of $10 million, and the State challenged the punitive damages award. The trial court determined that the punitive damages amount was high but that no miscarriage of justice occurred. The Appellate Division affirmed in large part but remanded for reconsideration of the punitive damages award, calling upon the trial court to consider the factors discussed in Baker v. National State Bank, 161 N.J. 220 (1999), and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).

The State petitioned for certification, arguing that the Appellate Division’s remand instructions were flawed in part because they failed to include direction to the trial court, consistent with this Court’s holding in Lockley v. Department of Corrections, 177 N.J. 413 (2003), to apply heightened scrutiny when reviewing awards of LAD punitive damages against public entities.

NJ Supreme Court’s Decision in Pritchett v. State

The New Jersey Supreme Court affirmed, although with modifications. “We agree with the State that the Appellate Division’s remand instructions require modification. In reviewing the punitive damages award, the trial court failed to apply the heightened scrutiny called for in Lockley and underscored in the companion case of Green v. Jersey City Board of Education, 177 N.J. 434 (2003). The Appellate Division’s instructions did not correct that inadequacy,” Justice Jaynee LaVecchia wrote. “While we commend the Appellate Division

for instructing the trial court to consider the Baker/BMW factors more fully, the Appellate Division’s remand instructions should have also alerted the trial court to the principles of Lockley and Green that apply in this matter.”

In reaching its decision, the New Jersey Supreme Court confirmed that punitive damages are available against public entities for violation of the New Jersey Law Against Discrimination (NJLAD), as well as the Conscientious Employee Protection Act (CEPA) just as they are available from private entities. It went on to highlight the fact that a “court’s responsibility to review awards of punitive damages for reasonableness is heightened when such damages are awarded against a public entity” because it is funded by taxpayers. Thus, the trial judge “must scrutinize with great care the amount of the award to determine whether it is proportionate to the harm suffered by the plaintiff.”

The New Jersey Supreme Court instructed the trial court on remand, and all trial courts reviewing a punitive damages award issued by a jury against a public entity defendant, to review the award under the heightened scrutiny required in Lockley and underscored in the companion case of Green v. Jersey City Board of Education, 177 N.J. 434 (2003). As the court noted, in Green, which involved a CEPA claim against a public entity, the court drew from Lockley and stressed that it “set rigorous standards for the calculation of punitive damages against a public entity, recognizing that ‘public monies are the source of the award.’”

Finally, the New Jersey Supreme Court found the Appellate Division’s discussion of the Baker/BMW factors to be substantially correct. The Due Process Clause imposes outer limits on the allowable size of an award of punitive damages, and the Appellate Division appropriately instructed the trial court, on remand, to substantially consider the factors advanced in BMW and incorporated into New Jersey law by Baker.

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